Circular No. 376-TC/NHKT/TT on the decision to implement short-term loan work for basic construction

CIRCULAR

Regarding the decision to implement short-term loans for basic construction

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THE MINISTER OF FINANCE

The Prime Minister has approved the "Regulations and Measures for Short-Term Loans for Basic Construction" (document number 1527-TN dated May 17, 1961 attached).

Based on the Prime Minister's directive, the Ministry of Finance decides The Vietnam Construction Bank shall implement short-term loan work for basic construction from June 1961.

We propose:

1. Central Ministries and sectors, Administrative Committees at all levels should disseminate the spirit and content of these lending regulations to subordinate units in localities to ensure good implementation together with local Loan Branches and Capital Disbursement Offices (attached are two explanations: On the significance and impact of basic construction loans, the necessity of organizing basic construction loans, and the main points in the loan regulations).

2. Administrative Committees of provinces, cities, autonomous regions shall supervise the compliance with the provisions of these regulations by local units, especially the use of borrowed funds, monitor the implementation of cashless payment regulations, and collect idle funds from basic construction to provide additional capital for the Construction Bank to meet borrowing requirements.

3. Financial Departments, particularly those with Capital Disbursement Offices for Basic Construction, Loan Branches, and Capital Disbursement Offices, shall organize training for staff on the spirit and content of the regulations and specific guidance circulars issued by the central Construction Bank to ensure correct implementation.

The Ministry of Finance plans to gradually implement lending in localities to gain experience before widely promoting it; the plan is as follows:

- In June, pilot in Hanoi, including the central Construction Bank and the Hanoi Branch.

- In July or August, implement in some large provinces.

- By the fourth quarter, implement in other provinces.

When localities receive directives from the Ministry of Finance (or the central Construction Bank), they will organize dissemination to units according to the guidance plan in the circular on the business practices of the central Construction Bank.

During the study or implementation of these regulations, if Ministries, sectors, Administrative Committees, Financial Departments, and local Construction Banks encounter unclear points or difficulties in implementation, they should inform the Ministry of Finance (or the central Construction Bank) for further explanation or assistance in resolving issues if necessary.

EXPLANATION 1

MEANING AND EFFECT OF BASIC CONSTRUCTION LOANS AND THE NECESSITY TO ORGANIZE BASIC CONSTRUCTION LOANS

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1. Basic construction capital provided by the State budget for basic construction projects is mostly disbursed through the Construction Bank, but typically, state-funded projects do not need to use all the allocated capital at once; additionally, the state's regulation of cashless payments and the requirement that all basic construction payments must go through the Construction Bank allow the bank to accumulate idle accounts of all basic construction units, thus temporarily holding a significant amount of idle capital which increases with the development of basic construction work.

To utilize this temporary idle capital to supplement planned capital disbursements and further accelerate basic construction, Article 2 of Decree No. 177-TTg dated April 26, 1957 establishing the Vietnam Construction Bank permits the Construction Bank to: "Provide short-term loans to state-owned enterprises (including local ones) according to the loan plan approved by the Government."

2. In recent years, the Construction Bank has not organized lending activities, partly due to the initial stage of establishment where the bank's machinery was weak, staff were inexperienced, requiring simultaneous work and experience gathering, focusing on the tasks of disbursing and accounting for basic construction capital, and partly because basic construction work had not developed significantly, with the needs for capital of construction projects, construction and supply enterprises fully met by the state budget, so short-term basic construction loans were not necessary.

Today, facing the increasingly strong development of basic construction work and the need to strengthen management of basic construction, the state has issued and is preparing to issue new systems to promote stricter management of basic construction capital. These systems (economic contract system, cashless payment regulations, revolving capital provision system for contracting and supply enterprises, etc.) when implemented, will create a new situation and new capital requirements that need to be addressed:

a) The implementation of the capital provision system for construction and supply enterprises will require careful calculation and provision of advance payments for material reserves from Party A to Party B, as well as self-owned revolving capital provided by the state to Party B and supply enterprises, based on quarterly average needs. However, basic construction work is highly influenced by weather and climate, so there are times when the reserve materials and general revolving capital required may exceed the average significantly. To ensure the stability of unexpected needs, such requirements cannot be resolved through state budget allocations but must be addressed through short-term credit measures, i.e., by borrowing from the Construction Bank.

b) Implementing the cashless payment rules through the Construction Bank, construction enterprises and supply enterprises, when delivering documents to request payment for construction project funds or raw materials and equipment sales proceeds, will not immediately receive payment but must wait for a certain period before being paid. If these enterprises need capital to continue operations, they must borrow from the Construction Bank.

Additionally, when facing financial difficulties, or having to pay urgent or unexpected expenses without recovering capital or receiving sufficient funding, such enterprises and construction units can also request short-term loans from the Construction Bank.

From the perspective of the Construction Bank, as the central settlement body for basic construction, it can concentrate all temporarily idle basic construction capital. As construction activities develop more extensively, payment discipline improves, and the scope of payments expands, the amount of deposits at the Construction Bank increases significantly, serving as an important source of funds that can be used for lending and supplementing the budgeted capital.

3. Organizing short-term loans for basic construction capital has the following advantages:

a) The Construction Bank can utilize temporarily idle basic construction capital to address sudden capital needs of construction and supply sectors, facilitating these enterprises to complete and exceed their basic construction plans, implement economic contract systems effectively, end prolonged debts, and prevent improper use of funds contrary to financial management principles.

b) Reducing budget allocations. Currently, to prevent construction and supply enterprises from lacking capital, advance payments from Party A to Party B (funded by the state budget) and self-owned working capital provided by the state to construction and supply enterprises are often calculated loosely rather than closely aligned with material reserve requirements or average quarterly operational needs. In addition, additional funding is still provided in emergencies. Such practices not only add burdens to the state budget but also fail to promote enterprises' enhanced accounting and rapid capital turnover, nor do they encourage increased productivity and reduced construction costs.

Once the Construction Bank organizes lending, there will be no fear of capital shortages, thus allowing for stricter calculations of working capital and advance payments to reduce budget allocations.

c) Strengthening the Construction Bank's financial management over the economic activities of basic construction sectors: Through lending activities, the relationship between the Construction Bank and borrowing entities becomes tighter, providing the bank conditions to delve deeper into entity operations, clearly identifying strengths and weaknesses in management and accounting, thereby offering bases for suggestions to improve management, accelerate material and capital turnover, and create conditions for faster construction progress and cost reduction.

d) Facilitating better import equipment payments: Previously, according to old basic construction capital allocation regulations and current payment rules for equipment, whenever import-export corporations obtain raw materials and equipment, the Ministry of Finance allocates limits to relevant ministries for payment to import-export corporations, which then gradually distribute the payment amounts to grassroots units based on the value of goods delivered. This approach has many drawbacks:

- Sometimes construction units receive goods but the relevant ministries have not allocated the values to them, leaving units without documentation for cost accounting.

- Grassroots units sometimes receive goods not intended for them and do not inform the relevant ministries, neglecting proper storage due to non-direct responsibility for payment, leading to stockpiling and damage, affecting state assets.

Now, under new lending rules, when importing goods, supply agencies of relevant ministries can borrow from the Construction Bank to immediately pay import-export corporations; subsequently, supply agencies deliver goods to construction units, which upon receipt of delivery documents, pay the supply agencies to repay the Construction Bank. For undelivered goods, supply agencies must properly store them and request the Ministry of Finance to allocate funds for repayment. This approach compels supply agencies to focus on distribution and storage of undistributed goods, eliminating stockpiling issues at construction units due to misallocation, and by year-end, based on undelivered goods' value, the imported goods' capital can be calculated for mobilization in the following year.

Lending for basic construction is an objective requirement in overall basic construction financial management, but simultaneously, it is a new task for us, so initially encountering some difficulties is inevitable.

1. Ideologically: Some units, enterprises, and sectors still heavily rely on supply-based management, failing to recognize the necessity and urgency of transitioning to economic accounting, may wish to borrow to meet capital needs but do not want to incorporate capital management into plans, or may want to borrow but resist the Construction Bank's oversight, even some units and enterprises prefer to continue using others' capital, causing prolonged debts and commercial credit expansion.

2. The basis for loan planning is the volume of basic construction and the financial income and expenditure plan for basic construction. However, currently, the quality of these plans generally remains inadequate; therefore, both in formulating and implementing loan plans, difficulties may arise.

However, these difficulties are not significant; they cause certain obstacles, but the very act of lending has a counter-effect, contributing to resolving those difficulties and challenges.

In addition, there are the following advantages:

- Many units and enterprises see the need to accelerate, strengthen, and stabilize basic construction work, thus requesting loans to meet their needs. At the same time, they recognize the effectiveness of lending activities in financial management and economic accounting within their units. These units are willing to accept the supervision of the Construction Bank through lending activities.

- The organizational structure of the Construction Bank is increasingly strengthened, capable of handling lending tasks. Idle funds concentrated at the Construction Bank are increasing, ensuring most of the capital requirements of units and enterprises, supplementing the state budget's capital allocation.

EXPLANATION 2

KEY POINTS IN THE LOAN REGULATIONS

1. Regarding the source of loan capital

a) The main capital of the Construction Bank comes from idle funds of units and industries with accounts at the Construction Bank. To ensure that this source of capital is fully and timely concentrated, construction units, installation enterprises, and supply units must strictly comply with the financial principles and regulations set by the State, such as: All idle funds for basic construction (for example: self-owned capital of enterprises and agencies used for basic construction; dedicated funds for basic construction; depreciation funds for major repairs of installation enterprises, supply enterprises for basic construction, and construction units) must be concentrated at the Construction Bank, and payments must be made promptly through the Construction Bank. On the part of the Construction Bank, it must identify uncollected or delayed funds to mobilize and utilize them for lending purposes.

b) In cases where the demand for loan capital is high while the Construction Bank's available capital for lending is insufficient, the Ministry of Finance may allocate a certain amount of capital to the Construction Bank to increase its lending capital.

c) If there is a large import of complete equipment, the Construction Bank must lend money to supply agencies of relevant sectors to settle with Foreign Trade, and the state budget will transfer the allocated capital for those complete sets of equipment to the Construction Bank as a source of lending capital.

d) If temporarily, the Construction Bank's capital is insufficient to meet legitimate borrowing requests, the Construction Bank may temporarily borrow from the State Bank.

2. Regarding the scope and objects of lending

According to the division of labor by the State, the Construction Bank only organizes lending in the field of basic construction, and currently, it only lends to units and enterprises managed by the Construction Bank for basic construction capital.

However, because units and enterprises in the field of basic construction still have monetary relationships with agencies and enterprises outside the field of basic construction, the Construction Bank, in lending and settlement, will closely coordinate with the State Bank to serve these units and enterprises well.

Additionally, the Construction Bank must comply with the State Bank's regulations on monetary management.

3. Conditions for lending

Basic construction lending must contribute to strengthening economic accounting systems, so the Construction Bank can only lend to units and enterprises that practice economic accounting, as only these units and enterprises have legal person status and the right to transact with the bank in settlement and lending.

4. Regarding the nature of loans and lending forms

The Construction Bank only provides short-term loans and lending forms similar to those of the State Bank, except for loans to pay for complete equipment. Currently, long-term loans for basic construction are not provided.

Lending for material reserves. - Units and enterprises are granted temporary capital by the State to reserve key materials and prepare for construction. This capital is allocated according to plans. Therefore, at times, units and enterprises may need additional capital temporarily to exceed planned levels, such as reserving sand and gravel before the rainy season, or storing bamboo and wood with seasonal characteristics. In such cases, the Construction Bank can provide loans to meet these temporary capital needs.

However, if units and enterprises purchase excessive materials due to inaccurate planning, exceeding planned levels and potentially leading to long-term accumulation, they cannot obtain short-term loans for reserves but must report specifically to the principal ministry and the State for resolution through payment of accumulated goods or additional temporary capital beyond the basic construction capital allocated in the financial plan.

Lending for excess working capital- Installation enterprises are granted working capital according to the financial plan. This capital is based on the annual average working capital level, so at times, enterprises may need temporary capital to exceed planned levels for reserving minor materials, inexpensive items prone to quick wear and tear, circulating materials, or to pay for completed project volumes exceeding planned levels. In these situations, short-term loans from the Construction Bank are allowed.

However, if materials are reserved excessively due to inaccurate planning and have the potential for long-term accumulation, this loan is not permitted, and enterprises must report to the principal ministry and the State for resolution through payment of accumulated goods or additional working capital.

If poor management leads to frequent delays in calculating project volumes, causing prolonged payments, this loan is not allowed, and enterprises must resolve the issue by improving management practices, promptly calculating volumes to ensure timely payments.

Lending for major repairs. - The source of funds for major repair loans is from the depreciation funds for major repairs deposited by units and enterprises. Therefore, the responsibility of these units and enterprises, if they have allocated depreciation funds for major repairs, is to deposit them with the Construction Bank to serve as the loan capital, and only those units and enterprises that have deposited depreciation funds for major repairs may borrow this amount.

Major repair loans are short-term loans. Ideally, the maximum loan term should be 12 months, but the loan must ensure repayment, and currently, there are no long-term plans for major repairs beyond the budget year, so major repair loans must be confined within the scope of the budget year. If units and enterprises still need additional funds without being able to guarantee repayment within the budget year, they must report to the competent ministry for resolution.

Loans for settlement purposes. - These loans aim to assist units and enterprises in recovering funds quickly to reinvest in new cycles. Additionally, they are intended to facilitate centralized settlement through the bank, eliminating commercial credit forms. The types of settlement loans are similar to those provided by the State Bank to enterprises in the production sector.

Loans for urgent and temporary needs. - This loan is intended to address situations where capital is insufficient due to exceeding the plan without receiving additional quarterly limits; equipment arriving earlier than planned without payment; changes in design leading to material shortages or unsuitable materials that cannot be resolved promptly; cases involving natural disasters.

As mentioned above, this loan encourages the completion of work beyond the plan. Whether it is monthly, quarterly, or annual overruns, if such projects are recorded in the annual plan or are certain to be included in next year's plan, the Construction Bank will provide loans to help units and enterprises accelerate construction progress.

Loans for full equipment settlement. - This loan, in nature, is also a settlement loan, but it is particularly applicable in the basic construction field.

This loan is also a short-term loan, and usually, the amounts involved are quite large. Therefore, supply organizations under various ministries and construction units need to pay special attention to improving delivery procedures, ensuring good settlement practices to effectively enhance equipment management at the grassroots level, implement financial income and expenditure plans properly, and ensure that supply organizations do not delay debt repayment.

5. Regarding responsibilities in planning and loan application and in approving loan plans.

Units and enterprises wishing to obtain loans must comply with specific provisions in the regulations regarding loan planning and loan applications.

Fulfilling this responsibility primarily involves enhancing the planning management of units and enterprises themselves, while also ensuring centralized state leadership in lending activities, guaranteeing state monetary control through the Construction Bank.

On the other hand, the Construction Bank must strictly adhere to the deadlines for reviewing loan plans and loan applications as stipulated in the regulations. Fulfilling this responsibility ensures timely satisfaction of capital needs for units and enterprises, guarantees rapid, extensive, high-quality, and cost-effective basic construction, and helps establish a systematic management framework for the Construction Bank.

6. Regarding interest rates.

When borrowing from the Construction Bank, units and enterprises must pay a certain amount of interest. Paying this interest is aimed at promoting units and enterprises to strengthen their management and economic accounting systems, ensuring timely repayment to the Construction Bank. Therefore, the interest rate is generally set at a low rate.

Currently, the Construction Bank initially implements loans and temporarily applies interest rates for loans and forms of loans as prescribed by the State Bank for similar loans and forms in the production sector.

REGULATIONS AND MEASURES

for short-term loans on basic construction

Chapter I:

GENERAL PROVISIONS

A. Purpose of short-term loans on basic construction.

Article 1. - Based on Decree No. 177/TTg dated April 26, 1957 of the Prime Minister specifying the tasks and responsibilities of the Vietnam Construction Bank and approved by the Prime Minister, the Ministry of Finance has established regulations and measures for short-term loans on basic construction for the Vietnam Construction Bank to implement these loans.

The purpose of short-term loans by the Vietnam Construction Bank is:

- To address temporary capital needs during the construction process, helping to increase construction speed.

- To facilitate the smooth completion of the basic construction plan.

- To save state capital for basic construction and promote economic accounting, reducing project costs in basic construction.

- To strengthen state supervision over basic construction management.

B. Principles of short-term loans on basic construction.

Article 2. - The Vietnam Construction Bank provides short-term loans for basic construction based on the following principles:

1. Borrowers must use the borrowed funds for predetermined purposes in the loan plan and can only receive funds according to the actual needs of implementing the plan in each period.

2. Borrowers must repay the borrowed funds within the agreed period, not exceeding 12 months.

3. The borrowed amount must be secured by inventory, products produced, or materials to be purchased with the borrowed funds, or by documents representing the value of inventory (settlement documents), equivalent to the borrowed amount.

C. Borrower eligibility and loan conditions.

Article 3. - The borrowers of the Vietnam Construction Bank are:

1. Construction enterprises (central and local) that have implemented economic accounting.

2. Enterprises supplying materials for basic construction or supply agencies directly under the competent ministries that have implemented economic accounting.

3. Geological survey teams that have implemented economic accounting.

4. Self-construction units and organizations undertaking contracts within self-construction units that have implemented economic accounting.

Where the Construction Bank has not yet organized lending activities, it shall entrust the State Bank to lend to the aforementioned units based on these regulations.

The borrowing units must have:

1. Construction plans, supply plans, financial plans, labor plans, and wage plans.

2. An independent accounting system.

3. Settlement accounts with the Construction Bank.

4. Legal personality and the right to directly transact with the Construction Bank.

D. Sources of Loan Funds.

Article 4. – The sources of loan funds of the Construction Bank include:

a) The balances of deposit accounts of units that have deposit accounts with the Construction Bank.

b) The balances of provisional receipt accounts, letter of credit accounts, special accounts, and other accounts with debit balances.

c) Budgeted capital allocated by the State.

d) Advance payments from the Ministry of Finance for the purpose of providing loans for complete equipment in exceptional cases.

e) Temporary loans from the State Bank when the aforementioned types of capital are insufficient.

Chapter II:

LOANS

Article 5. – The Construction Bank will provide loans to the units mentioned in Article 3 for excess capital to assist them in addressing seasonal or extraordinary capital needs arising during the implementation of basic construction work and capital requirements during circulation.

Article 6. – Based on its current financial capacity and organizational situation, the Construction Bank will only provide the following types of loans:

1. Loans for material reserves:

a) According to the construction season.

b) According to the material season.

2. Loans for excess working capital.

3. Loans for major repairs.

4. Payment loans:

a) By means of "collection and payment" method.

b) By means of "letter of credit" method.

c) By means of "special account" method.

d) By means of "fixed limit checkbook" method.

5. Emergency and temporary loans.

6. Payment loans for imported equipment (complete equipment).

Section A. – LOANS FOR MATERIAL RESERVES

a) According to the construction season:

Article 7. – The Construction Bank will provide loans to construction enterprises to increase material reserves when such enterprises need to take advantage of favorable construction seasons and the workload in that quarter exceeds the average annual workload due to insufficient allocated capital for material reserves according to the standard.

Article 8. – Construction enterprises wishing to borrow additional funds for material reserves must meet the following conditions:

1. They must submit quarterly borrowing plans to the Construction Bank twenty-five days before the start of each quarter.

2. These borrowing plans must be recorded in the Construction Bank's lending plan and included within the quarterly borrowing limit set by the Central Construction Bank after thorough review of the purpose and requirements of the borrowing request.

3. The inventory level of materials must exceed the standard reserve level. In cases where funds are needed urgently for purchases, the enterprise must present purchase contracts or invoices from suppliers as proof. If purchases are made without contracts, the enterprise must prepare short-term procurement plans for the bank to base its lending decision on. In such cases, the bank will lend first and then verify the inventory later.

Article 9. – When applying for a loan, construction enterprises must submit a borrowing application along with necessary documentation related to the loan to the Construction Bank.

All these documents serve as collateral for the loan amount, and the Construction Bank will base its lending decision (loan amount, time of disbursement, repayment period, repayment terms, etc.) on these documents.

Article 10. – Upon receiving the aforementioned documents, the Construction Bank will review and examine the following aspects:

- Whether the workload matches the construction plan for the next quarter.

- The quantity of materials required to complete the workload.

- The amount of advance payments compared to the value of materials needed for the next quarter.

- The daily average material usage throughout the year.

- The daily average material usage during the requested borrowing quarter.

- The number of days required for material reserves...

Article 11. – To determine the loan amount, the Construction Bank will calculate material reserves at actual prices if they are lower than planned prices, and at planned prices if actual prices are higher. If the enterprise does not have sufficient funds to purchase the required materials due to planned price calculations, the enterprise must request the competent ministry to adjust the planned prices. After adjusting the planned prices, the Construction Bank will provide additional loans for the difference.

Article 12. – Within three to five days from the date of receiving the borrowing application, the Construction Bank must inform the borrowing enterprise whether the loan is approved, how much can be borrowed, and the repayment terms, allowing the enterprise to prepare three copies of the loan receipt form (Form No. 3). Upon receiving this form, the Construction Bank will review it again and transfer the loan amount to the enterprise's settlement account.

Article 13. – This loan must be repaid gradually and fully in the quarter following the borrowing quarter. The Construction Bank will collect the loan amount progressively as the excess material reserves decrease. The repayment period and amount will be determined in advance and noted on the loan receipt form. On the repayment date, the Construction Bank will deduct the amount from the enterprise's settlement account. If the enterprise's account does not have sufficient funds, the Construction Bank will notify the enterprise to arrange payment. If payment is not made within five days beyond the due date, the Construction Bank will transfer the loan amount to the "Overdue Debt" account and calculate interest on this debt according to the rate applicable to "Overdue Debt" as stipulated in Article 36 of this regulation.

b) According to the material season:

Article 14. – The Construction Bank will provide loans to construction enterprises and material supply enterprises to reserve seasonal materials for those materials whose production or transportation is seasonal or irregularly supplied, thus requiring excess reserves to address supply difficulties during peak demand periods.

Article 15. – To be eligible for loans, construction enterprises and supply enterprises must meet the conditions specified in Article 8, in addition to submitting loan applications to the Construction Bank, accompanied by the following documents:

- A list of materials that need to be stored, specifying each type of material; current quantity, quantity required for storage, storage period, and cost.

Article 16. – The Construction Bank will review the above documents and decide on the loan.

Loan procedures and debt recovery methods shall be carried out as stipulated in Articles 11, 12, and 13.

Section B. – LOANS FOR EXCESS WORKING CAPITAL

Article 17. – The working capital of construction enterprises, allocated by the competent ministry according to a predetermined level based on the average turnover of funds quarterly throughout the year, is intended for the following expenditures:

- Consumable items.

- Fuel and feed for livestock.

- Auxiliary materials.

- Unallocated costs: For temporary small construction projects, for circulating materials, miscellaneous expenses.

- Uncompleted secondary production.

- Completed project costs but unpaid.

- Reserve funds.

When the volume of contracted work increases, this predetermined working capital level may also increase. The Construction Bank will provide construction enterprises with loans to cover the additional working capital needed due to increased workload.

- Loan conditions are also as stated in Articles 8 and 9.

- Loan procedures and debt recovery methods are as stated in Articles 11, 12, and 13.

Article 18. – The Construction Bank provides supply enterprises engaged in basic construction with predetermined working capital loans (the portion not provided by the State) and also offers loans when the demand for working capital exceeds the average level, similar to construction enterprises.

To obtain a loan, supply enterprises must submit a loan application to the Construction Bank along with a list of existing inventory materials, additional materials to be supplied, storage period, and prices.

Loan conditions and procedures are as stated above.

Section C. – LOANS FOR MAJOR REPAIRS

Article 19. – The Construction Bank provides loans for major repair expenses to construction enterprises, construction units undertaking repairs themselves, supply enterprises, and geological survey teams, in cases where the amount of depreciation for major repairs has not yet reached the amount required for such repairs.

These entities must have a deposit account for major repair depreciation at the Construction Bank and must deposit monthly depreciation for major repairs into this account.

Article 20. – When applying for a loan for major repairs, these entities must submit a detailed annual plan for major repair depreciation, specifying the objects requiring major repairs, completion time, and the amount of loan needed for the Construction Bank to calculate the loan amount.

Article 21. – Within three days from receiving the loan application, the Construction Bank must inform the borrowing entity whether the loan is approved, the amount of the loan, and the repayment terms so that the borrowing entity can proceed with the loan receipt procedures.

a) The maximum amount the Construction Bank lends for major repairs cannot exceed the planned depreciation amount for the year but has not yet been depreciated. If the repair cost exceeds the annual depreciation plan, the competent ministry must resolve the excess amount.

b) The loan term for major repairs does not extend beyond the year, and the Construction Bank will base the monthly installment repayment amount on the monthly depreciation required.

Upon maturity, the Construction Bank will proactively deduct from the "Depreciation Deposit for Major Repairs" account of the borrowing entity to repay the debt. If this account does not have sufficient funds, it will deduct from the settlement account. If the settlement account also lacks sufficient funds, the Construction Bank will transfer the outstanding debt to "Overdue Debt" until the accounts mentioned above of the borrowing entity have sufficient funds to settle the loan.

Section D. – LOANS FOR PAYMENTS

Article 22. – In cases where construction enterprises and supply enterprises have completed and handed over finished projects or sold raw materials but have not yet received payment, and in situations where advance payment is required before receiving goods, resulting in a shortage of enterprise capital, the Construction Bank will provide loans based on relevant documents related to the enterprise's transactions.

Article 23. – Depending on the situation, the Construction Bank will provide payment loans in the following forms:

- Collection and remittance

- Opening a letter of credit

- Opening a special account.

- Opening a fixed checkbook.

These loan forms shall be carried out in accordance with the general payment loan regulations of the State Bank.

Section E. – TEMPORARY AND URGENT LOANS

Article 24. – The Construction Bank will provide temporary and urgent loans in the following cases:

- Construction progresses beyond the plan while the next quarter's limit has not yet been received.

- Equipment or materials are delivered ahead of schedule or in excess of the planned reserve, causing the receiving unit to lack funds for payment.

- The construction or design plan changes due to approval by competent authorities, necessitating immediate purchase of new materials that are not suitable for existing reserves.

- Flood prevention, storm preparation, fire prevention, or other natural disasters.

- Insufficient funds to pay workers' wages.

- There is a receipt for the construction project cost but the payment from Party A has not yet been received.

Article 25. – To obtain a loan, the borrowing entity must submit a loan application detailing the specific situation, the amount requested, and the repayment period. The Construction Bank will review and process the request. At the latest, within two days of receiving the loan application, the Construction Bank must inform the borrowing entity whether the loan is approved, how much it is, and the conditions for repayment so that the borrowing entity can proceed with the loan procedures.

Upon maturity of the loan, the Construction Bank will recover the debt according to the procedures outlined in the above loan forms. However, depending on the actual circumstances of each case, the Construction Bank may recover the debt early or gradually. If Party A has not yet received the quota, thereby preventing Party B from being paid and requiring a loan, the Construction Bank will recover the debt when Party A receives the quota, or if materials need to be resolved due to changes in plans or designs, the Construction Bank will recover the debt as soon as the materials are resolved until the loan maturity date.

Section F. – LOANS FOR FULL EQUIPMENT PAYMENTS

Article 26. – The Construction Bank provides loans to supply agencies under the respective Ministries to pay for imported goods from foreign trade units providing full equipment.

Each time they receive a payment notice from equipment suppliers, supply agencies under the respective Ministries must submit a loan application along with the payment notice or delivery invoice to the Construction Bank for review. The Construction Bank’s review period shall not exceed three days from the date of receipt of the loan application. After reviewing, the Construction Bank will notify the borrowing entity of the loan amount and repayment period so that the borrowing entity can proceed with the loan procedures.

- The loan amount is the amount required to pay the equipment supplier. For raw materials prepared for production not included in the basic construction plan, the Construction Bank will not provide a loan.

- The loan term is the time for receiving the goods plus the distribution time to using units and the payment time of the using units, but the maximum duration shall not exceed thirty days.

Article 27. – The Construction Bank will gradually recover the debt as follows:

a) For equipment that cannot be immediately distributed to localities and must remain in the supply warehouse for a long time, as well as expenses for experts, trainees, and design projects that cannot be allocated, the respective Ministry must request the Ministry of Finance to allocate funds for payment. Once the funds are allocated, the Construction Bank will recover the debt.

b) For equipment directly handed over to using units at localities, after delivery, supply agencies must demand payment through "Collection on Delivery" or by means of a collection mandate. When payment is received, the Construction Bank will recover the debt.

If the debt is not recovered by the due date, the Construction Bank will deduct from the supply agency's deposit account. If the account does not have sufficient funds, the Construction Bank will transfer the remaining debt to "Overdue Debt" (but for the loans mentioned in point a, if the due date is reached and the respective Ministry does not request the Ministry of Finance to allocate funds for payment, the Construction Bank will deduct from the respective Ministry's distribution quota to repay the debt).

Chapter III:

ESTABLISHING AND REVIEWING PLANS

Article 28. – Construction enterprises, supply enterprises, and other entities eligible for loans from the Construction Bank must establish loan plans according to the types of loans specified in Article... (except for settlement loans and urgent and temporary loans which do not require a plan). The central Construction Bank will base its allocation on the comprehensive loan plan approved by the State. Each branch within the prescribed limits will provide loans to enterprises whenever needed.

Article 29. – Borrowing entities must submit quarterly loan plans divided by month to their branch office where the account is opened and also send them to the respective industry or Ministry managing authority twenty-five days before the start of the quarter together with construction, supply, financial, and labor plans. For annual plans, they must be submitted in mid-November of the previous year along with the aforementioned plans to local branches and the managing industry. Annual plans must be divided by quarter, and for the first quarter, it can be based on the annual plan divided by quarter and then by month.

Upon receiving the loan plans, the branches will study and exchange opinions with the requesting entities, then compile the branch loan plan and submit it to the central Construction Bank along with specific comments.

Article 30. – Based on the loan requests from subordinate units of the Ministries, the managing industries will compile these into industry plans and submit them to the central Construction Bank fifteen days before the start of the quarter or thirty days before the start of the year, accompanied by tender acceptance, construction, supply, financial, labor, and wage plans, etc.

The central Construction Bank will coordinate with the Ministries and managing industries to review the loan plans, consolidate them, and present them to the Ministry of Finance for examination. Subsequently, the Ministry of Finance will submit to the Government for approval.

Article 31. – After the Government approves the loan plan, the Central Construction Bank will notify relevant Ministries or supervising sectors to distribute the loan amount according to the plan to each subordinate unit and report back to the Central Construction Bank (that is, allocate the loan limit). The Central Construction Bank will inform each Branch of the loan limit for each unit within the first 15 days of each quarter.

Chapter IV:

INSPECTION OF LOAN USE

Article 32. – To ensure that funds are used according to the principle of "money for specific purposes," the Central Construction Bank must regularly inspect the use of loans. If misuse of funds or underutilization of loan amounts is detected, they must be immediately recovered. Additionally, the Central Construction Bank must also inspect changes in materials, depreciation payments, usage of settled loan accounts, and valid documents to ensure payment through the "collection on behalf" method, etc., to gradually recover loans as stipulated above.

Article 33. – To assist the Central Construction Bank in fulfilling the aforementioned tasks, borrowing units must present necessary documents whenever requested by the Central Construction Bank and must submit monthly the following documents to the Central Construction Bank:

- Monthly, quarterly, and annual balance sheets with all supporting schedules and explanations.

- Reports on construction project costs or structural works.

- Financial income and expenditure reports.

- Reports on implementation of construction and material supply plans.

- Reports on inventory and raw material purchases and sales situations.

In summary, borrowing units must simultaneously send a copy to the Central Construction Bank when submitting reports to higher authorities.

Article 34. – Based on the aforementioned documents or actual conditions, if the situation does not meet the requirements for borrowing, the Central Construction Bank will notify the unit and immediately recover the debt. If the deposit account of the unit does not have sufficient funds, the Central Construction Bank will transfer the debt to the "Overdue Debt" account and request the unit to develop a repayment plan promptly.

Chapter V:

INTEREST RATES

Article 35. – For short-term loans (excluding working capital loans within the quota or loans for settlement), the Central Construction Bank will apply a uniform interest rate equal to the State's prescribed short-term loan interest rate for state-owned industrial enterprises (currently 0.4% per month).

For loans for settlement and working capital within the quota, the Central Construction Bank will apply an interest rate equal to the State Bank's interest rate for such loans (currently 0.2% per month).

Chapter VI:

DISPOSITIONS

Article 36. – Borrowing units from the Central Construction Bank must comply with the debt repayment rules and reporting regulations specified in Article 33.

1. If the debt is not repaid upon maturity, the Central Construction Bank will proactively deduct from the settlement deposit account to recover the debt.

For large-scale repair loan debts, the Central Construction Bank will deduct from the large-scale repair depreciation account; if this account does not have sufficient funds, the Central Construction Bank will deduct from the settlement deposit account.

In cases where the settlement deposit account of borrowing units does not have sufficient funds to repay the debt, the Central Construction Bank will transfer the debt to the "Overdue Debt" account and apply an interest rate twice as high for the overdue period.

For overdue payment debts for imported goods (as mentioned in point a of Article 27, which requires the supervising Ministry to request a quota from the Ministry of Finance for settlement), the Central Construction Bank will deduct from the pending distribution quota account of the supervising Ministry to recover the debt.

2. If the borrowing unit fails to submit monthly, quarterly, or annual reports to the Central Construction Bank as stipulated in Article 33, the Central Construction Bank will officially notify and temporarily suspend any type of loan until the required documents are received.

In this case, the Central Construction Bank has the right to demand early repayment of part of the debt but must notify the borrowing unit ten days in advance.